STRATEGIC FINANCIAL DECISION AND ANALYSIS

STRATEGIC FINANCIAL DECISION AND ANALYSIS Order Description This is a Strategic Management assignment divided into three parts 2000 words for part 1 and 3000 words for part 2 i'll upload a files that contain everything for part 1 and 2 . first part has its own forecast excel sheet for the whole financial figures . Part 2 also has it's own forecast excel sheet . so at the end you will have two excel sheet one for part 1 and part 2 , make sure you separate them . Part 2 has a question on liquidation i'll copy and past the figures of the question. ((PART 1)) PART 1 (40%): The Finance; Investment; Dividend and Risk Management Strategy You are a member of the Board of UK OIL Plc whose role is to make strategic and operational decisions. Throughout the last few months, your Finance Department have been considering a number of issues, detailed on the attached. Next week (week commencing 12th January) they will present their findings. Following their presentation, your task is to submit a report justifying your decisions and highlighting the risks and considerations you have in making these decisions. Which machine (if any) should you buy ? British Oil Machinery who have quoted £3,000,000 OR Munchen Machinery Germany who have quoted of €3,400,000 supported by appropriate international guarantees. How should you finance the purchase ? Equity (Shares) or Debt finance or a Combination If Debt, what type of debt ? Loan or Bond Fixed or Floating Rate Sterling or Foreign Currency The company’s Risk Management (Hedging) Strategy The company’s Dividend Policy ? ( (( PART 2 )) PART 2: Mergers & Acquisitions Stage 1 (30%) UK Oil Plc have been performing well and are now considering their growth strategy. One possibility, is the acquisition of Arabic Oil Supplies Abu Dhabi, though you may wish to recommend alternative growth strategies To support you: The Finance Department have been evaluating the financial implications, costs, benefit etc and will present their findings during the Week Commencing 16th February 2015 with regard to: method of finance transfer price location and operation of Group Treasury Department which may be possible/advantageous post-acquisition Following their presentation, your task is to submit a report justifying your decisions and highlighting the risks and considerations you have in making these decisions. Your growth strategy, include and evaluation of the proposed acquisition and alternative strategies ( apply Ansof matrix ) The Method of Financing the Acquisition ( how are you going to finance the business ) How should you finance the purchase ? Equity (Shares) or Debt finance or a Combination If Debt, what type of debt ? Loan or Bond Fixed or Floating Rate Sterling or Foreign Currency Location and Operation of the Treasury Department ( if it’s in UAE there will be only 30% return to UK . if it’s in Uk based calculate the tax ) Tax Management, including consideration of Transfer Pricing, Remittance Restrictions and Corporate Social Responsibility. (( PART 2 STAGE 1 - LIQUIDATION )) Unfortunately the acquisition which (you can now assume) was financed by issuing sterling debt equivalent to $20,000,000, proved disastrous and the company are now facing the possibility of administration or even liquidation. Present an outline of how funds would be distributed in the event of liquidation and evaluate the position of each class of creditor including the various shareholders assuming: Non Current Assets realize £140,000,000 Current Assets include: Bad Stock £5,000,000 Bad Debts £10,000,000 Liquidation Fees of £500,000 Consolidated Balance Sheet of UK Oil Group as at 31.12.20x5 £000 £ 000 Non Current Assets £ 162,000 Goodwill £ 8,000 Current Assets £ 55,000 Less Current Liabilities £ 50,000 £ 5,000 £ 175,000 Less Non Current Liabilities Loans (secured) £ 70,000 £ 105,000 Share Capital – 50p Ordinary Shares £ 50,000 Share Capital – 5% £1 preference shares £ 30,000 Share Premium £ 20,000 Retained Profits £ 5,000 £ 105,000